DISTANCE EDUCATION

B.B.M. DEGREE EXAMINATION, MAY 2012.

FINANCIAL ACCOUNTING

Time : Three hours Maximum : 100 marks

SECTION A — (5 × 8 = 40 marks)

Answer any FIVE questions.

1. What are subsidiary books? Explain the purpose of each

one of them.

2. Prepare Trading Account of Archana for the year ending

31-12-96 from the following information :

Rs. Rs.

Opening Stock 80,000 Purchase returns 10,000

Purchases 8,60,000 Sales returns 3,16,000

Freight Inward 52,000 Closing stock 1,00,000

Wages 24,000 Import duty 30,000

Sales 14,40,000

3. Jain of Delhi consigned 300 tins of coconut oil to Narang

of Chandigarh, invoiced at Rs. 200 per tin. Jain paid

Rs. 2,000 as carriage and other expenses. The consignor

drew a bill of exchange for Rs. 16,000 which was later

discounted at Rs.15,700. The consignee rendered an

account sale showing the following details:

15DE–3582

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280 tins sold at Rs.250 per tin; and 20 tins sold at Rs.260

per tin. Storage and selling expenses Rs.5,000; Clearing

and cartage Rs.1,600; Commission at 6% on sales. The

consignee sent a sight draft for the balance. Show

important ledger accounts in the books of Jain.

4. What is average due date? Why is it calculated?

5. On 31.12.2000, subscriptions outstanding were Rs. 10,000

and received in advance for 2001 Rs. 8,000.

During 2001, subscriptions received were Rs. 80,000

including Rs. 7,000 towards the dues of the year 2000. On

31.12.2001, total subscriptions outstanding were

Rs. 12,000 and received in advance for 2002 Rs. 6,000.

You are required to show :

(a) Subscriptions to be credited to Income and

Expenditure a/c and

(b) Extract from Balance sheet of 2001 showing the

items to subscriptions.

6. A, B and C are partners sharing profits in 4:2:4 ratio. You

are required to calculate the gaining ratio when (a) ‘A’

retires (b) ‘B’ retires (c) ‘C’ retires.

7. M Limited issued 10000 equity shares of Rs. 10 each

payable as to : Rs. 2 per share on application Rs. 5 per

share on allotment Rs. 3 per share on first and final call.

All money was duly received. Show the necessary journal

and cash book entries to record the above transactions.

SECTION B — (4 × 15 = 60 marks)

Answer any FOUR questions.

9. The following are the ledger balances extracted from the

books of Weifa.

Rs. Rs.

Weifa’s capital 50,000 Sales 3,01,000

Bank Overdraft 8,400 Return inwards 5,000

Furniture 5,200 Discount (Cr.) 800

Business premises 40,000 Taxes and Insurances 4,000

Creditors 26,600 General Expenses 8,000

Opening Stock 44,000 Salaries 18,000

Debtors 36,000 Commission allowed 4,400

Rent from tenants 2,000 Carriage on purchases 3,600

Purchases 2,20,000 Provision for

Doubtful debts 1,000

Bad debts written off 1,600

Adjustments :

(a) Stock on hand on 31.12.1995 was estimated as

Rs. 40,120

(b) Write off depreciation on business premises Rs. 600

and furniture Rs. 520

(c) Make a provision of 5% on debtors for bad and

(d) Allow interest on Capital at 5% and carry forward

Rs. 1,400 for unexpired insurance

Prepare final accounts for the year ended

31.12.1995. DE–3582

10. The following transactions took place between Ram and

Krishna from 1.1.90 to 30.6.90.

1990 Rs.

Jan. 1 Sold goods to Ram 2,240

Jan. 10

Received Ram’s acceptance at

2 months

1,000

Feb. 15 Received cash from Ram 1,200

Mar. 2 Bought goods from Ram 5,500

Mar. 3 Accepted Ram’s bill at 1 month 2,000

April. 11 Paid cash to Ram 2,000

Apr. 30

Sold goods to Ram payable up to

31st

May

2,400

May 11 Bought goods from Ram 1,500

Sold goods to Ram payable up to

10th

June

2,200

June 15 Bought goods from Ram 3,000

Prepare the account current to be sent by Krishna on

30-6-1990. The rate of interest is 5%.

11. The following is the Receipts and Payments a/c. of the

young club in respect of the year to 31st

Dec. 1985.

Receipts Rs. Payments Rs.

To Balance b/d 20,500 By Salaries 41,600

To Subscription By Stationery 8,000

1986 1,600 By Rates 12,000

1985 42,200 By Telephone

1984 800 44,600 charges 2,000

To sports By Investments

meeting profit 31,000 (in Rs. 25,000 4%

To Dividend on stock at par) 25,000

investments 20,000 By Sundry Expenses 18,500

By Balance c/d 9,000

1,16,100 1,16,100DE–3582

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The following additional information is available :

(a) There are 450 members each paying an annual

subscription of Rs.100, Rs.900 being arrear for 1984

at the beginning of 1985.

(b) Stock of stationary at 31.12.84 was Rs.1,000 ; at

31.12.85 Rs.1,800

(c) At 31.12.85, the rate were prepaid to the following

31st

March, the yearly charge being Rs.12,000. A

quarter’s charge for telephone is outstanding the

amount accrued being Rs.700. Expenses accruing at

31.12.84 Rs.1,400.

(d) At 31.12.84 the building stood in the books at

Rs. 2,00,000 and it is required to write off

depreciation @ 5% p.a. Investments at 31.12.84 were

Rs. 4,00,000.

You are required to prepare an Income and

Expenditure a/c for the year ended 31.12.85 and a

Balance Sheet as at that date.

12. P, Q and R share profits in proportion of

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and

On the date of dissolution their Balance Sheet was as

follows :

Liabilities Rs Assets Rs.

Creditors 14,000 Sundry Assets 40,000

P’s capital 10,000

Q’s capital 10,000

R’s capital 6,000

40,000 40,000

The assets realised Rs. 35,000. Creditors were paid in

full. Realisation expenses amounted to Rs. 1,500. Close

the books of the firm.

13. A company issued 100000 equity shares of Rs.10 each;

Re.1 payable on application, Rs. 2 on allotment, Rs. 3 on

first call and Rs.4 on final call. All the money payable on DE–3582

application, due on allotment and calls have been

received with the following exceptions: Patel who holds

1,000 shares has not paid the money due on allotment

and calls. Asha who holds 500 shares has not paid the

money due on first and final calls. Kumar who holds 300
shares has not paid the amount due on final call. The

shares of Patel, Asha and Kumar were forfeited. These

shares were subsequently reissued for cash at a discount

of 5%. Pass journal entries recording the above

transactions and prepare balance sheet of the company.

14. Prepare Profit and Loss Account for the year ended 31st

March 2004, of Rajesh Bank. From the following

particulars:

Rs (‘000)

Interest on Loan 250

Interest on Savings a/c 150

Interest on Cash Credits 160

Interest on Fixed Deposits 190

Interest on Overdrafts 70

Payment to Employees 150

Discount on Bills discounted 40

Rent, Taxes, Insurance and Lighting 5

Commission Exchange and Brokerage 15

Auditors Fees and Expenses 10

Director’s Fees and Expenses 20

15. What is trial balance? Explain its significance.